DWS Global Agribusiness Offshore Fund: Opportunity to own a global portfolio

Inflation may be off its 12-month high but it still remains a potent threat to growth. Food inflation has been in double digits for some time now and has left a hole in the pockets of many.

Rising food item prices the worldover suggests that a rising population and sustained increase in income levels, particularly in the developing countries, has increased demand for the persihables. The bottom line is the food prices are on a mega uptrend.

One way to get rid of the worry and benefit from rising food prices is to get into the business of agriculture.
If that’s a tough ask, then you could consider investing in. DWS Global Agribusiness Offshore Fund (DGAOF). This is an open-ended fund of fund offering from Deutsche Asset Management.

The fund has an objective of generating long-term capital growth by investing predominantly in units of overseas mutual funds focusing on agriculture, with a view to becoming direct or indirect beneficiaries of the anticipated growth in the agriculture sector and its affiliate or allied sectors.

DGAOF invests in DWS Invest Global Agribusiness (underlying fund) that is registered in Luxembourg. The underlying fund intends to invest in companies that are involved in agricultural activities ranging from land and plantation, seed and fertilizers, planning, harvesting, protecting and irrigation, food processing and manufacturing companies, offering investors the opportunity to capture value at various points along the “food chain.”

An approach to capture the value across the food chain helps the fund invest in opportunities at various levels of activity in food chain. The underlying fund has no benchmark. The underlying fund was launched in November 2006. The fund offers you an exposure to invest into a wide bouquet of opportunities related to ‘food’— a basic necessity.

This broad mandate ensures that the risk associated with the fund is lower than most other themes. The portfolio of the fund is diversified across the globe thereby reducing the geographical risks.

DGAOF has chosen MSCI World Index as a benchmark. The fund manager will invest 80-100% of the assets in the units issued by overseas mutual funds, predominantly the underlying fund. The remaining portion of the money will be invested in fixed income securities.

The new fund offer will close on April 30, 2010. Minimum application amount is Rs 5000. There is no entry load, but there is an exit load of 1% if you chose to exit before completing 12 months from the date of allotment. For systematic investment plan, the targeted amount has to be at least Rs 12000 and can be invested over maximum 12 months. Investors can chose from growth, dividend or dividend payout options.

Why invest: An opportunity to own a global portfolio across food supply chain.

Why not to invest: Investor is exposed to all the risks of a thematic fund, and the fund of fund structure is not as cost-efficient as a diversified equity fund.